Main Points :
- Nearly $4 billion in Bitcoin ETF outflows since October 10 have erased year-to-date gains.
- The market has entered the historically weak second year of the halving cycle, raising long-term holder anxiety.
- On-chain data shows aging supply moving and whales trimming exposure.
- Without new ETF inflows, Citigroup expects Bitcoin to drift toward its bear-case target of $82,000.
- Regulatory developments in Washington may become a major catalyst for renewed demand.
- Citigroup maintains a 12-month price target of $181,000, assuming $25 billion in ETF inflows next year.
1. Introduction: A Halving Cycle Winter Arrives Earlier Than Expected
Bitcoin entered late 2025 with considerable optimism. Institutional adoption had accelerated, U.S. states were purchasing Bitcoin for the first time, and the global macro backdrop appeared primed for risk-asset recovery. Yet by November, the mood shifted sharply. Citigroup now warns that the market has entered a “halving winter”, a historically weak period occurring in the second year after each halving.
The bank’s latest report highlights nearly $4 billion in ETF outflows since October 10—an unusually severe liquidity drain driven by macro fragility, derivatives-market stress, and a sharp decline in investor confidence. These outflows have dragged Bitcoin down toward ETF holders’ average cost basis, erasing most of the year’s gains.
2. ETF Outflows Near $4 Billion: How a Flash-Crash Sparked a Spiral
Citigroup attributes the outflow surge to the October derivatives flash-crash, which wiped out leveraged long positions and triggered cascading liquidations across the crypto futures market. The shock event shattered confidence and led ETF investors—typically slow to react—to finally pull out capital.
Bitcoin ETFs had been one of the strongest sources of structural demand since early 2024. Their sudden reversal marks a critical inflection point:
- $4B in outflows since October 10
- Year-to-date ETF contributions nearly erased
- Flows diverging sharply from expectations of $7.5B in inflows by year-end
- BTC drifting closer to the bank’s bear-case $82,000 scenario
These numbers underscore the fragility of Bitcoin’s current price structure. Citigroup’s analysts now see ETF behavior as the central driver of short-term market direction.
3. Long-Term Holders Turn Defensive: Aging Supply Begins to Move
Historically, Bitcoin’s second halving year often triggers behavioral shifts among long-term holders. Citigroup’s report highlights increasing anxiety among “old supply” wallets—addresses holding coins for multiple years.
On-chain data indicates:
- Older UTXOs have begun to move
- Large wallets (1,000+ BTC) are reducing positions
- Long-term holders are defensive, not accumulating
This trend is significant. Long-term holders generally anchor Bitcoin’s price stability. When they begin selling—especially during a weak halving year—it often signals an extended consolidation phase rather than an imminent breakout.
4. Market Underperforming Traditional Assets: A Dangerous Divergence
Citigroup analyst Alex Sanders notes that Bitcoin has been underperforming risk assets that traditionally correlate with its movements. Equities rebounded after the macro stress of early October, but Bitcoin did not participate in the recovery.
This divergence suggests that:
- Broader markets are improving
- Bitcoin lacks a short-term catalyst
- ETF flows—not macro conditions—are the dominant factor
Sanders warns that unless either U.S. digital-asset legislation advances or equities break to new highs, Bitcoin may continue drifting lower through the end of the year.
5. The Critical Level: Why $80,000 Matters
Citigroup places special emphasis on the $80,000 level, calling it a “psychological and structural pivot point” for ETF holders. The average cost basis of many ETF investors lies just above $80K. If price falls below that threshold:
- ETF redemptions may accelerate
- Long-term investors may capitulate
- Systematic outflows could intensify
Bitcoin’s current trading near $86,500 puts it dangerously close to triggering these conditions, especially if ETF outflows continue.
6. Price Trajectory: Heading Toward the $82,000 Bear-Case Scenario
Citigroup’s base-case scenario assumed year-end inflows of $7.5 billion into Bitcoin ETFs. Instead, the market moved into negative territory. As a result, analysts now say Bitcoin’s path is tracking much closer to their bear-case trajectory.
The chart illustrates how Bitcoin has decoupled from historical patterns and is now mirroring the weakest segments of prior halving cycles.
7. What Could Reverse the Trend? Regulation May Hold the Key
Citigroup highlights regulatory momentum in the U.S. as the single most important catalyst going into 2026. Key developments include:
- Multiple crypto-forward bills in Congress
- Increasing bipartisan support for clear digital-asset classifications
- Recognition that Bitcoin spot markets may require new regulatory structures
- Growing political attention during the U.S. election cycle
If Washington passes even incremental regulatory clarity—particularly around spot-market oversight—Citigroup expects ETF inflows to return sharply.
8. A Bullish Turn in 2026? Citigroup Still Sees $181,000 Next Year
Despite short-term weakness, Citigroup remains structurally bullish.
Their 12-month forecast maintains:
- $25 billion in cumulative ETF inflows
- $181,000 BTC fair value target
The bank argues that once structural clarity returns, institutional allocators will re-enter the market, particularly those who missed early-2024 accumulation phases.
Additionally, macro environments for 2026 appear favorable:
- Potential rate cuts in major economies
- Expanding sovereign participation (Texas, Wyoming, New Hampshire)
- Accelerating tokenization of real-world assets
- Renewed interest from pension funds and insurance companies
These factors combine to form what Citigroup calls a “second wave of institutional adoption.”
9. Broader Market Implications: Opportunities in Altcoins and Blockchain Infrastructure
For readers actively seeking new crypto assets or income opportunities, Citigroup’s analysis suggests several themes:
a. Compliance-first altcoins may outperform
If Washington advances digital-asset laws, compliant projects (KYC-ready, enterprise integration, AML-aligned) may benefit first.
b. Infrastructure tokens remain attractive
As ETF demand returns, underlying infrastructure (L2s, bridges, custody tech, staking providers) historically sees renewed capital rotation.
c. Real-world asset (RWA) networks are gaining momentum
Tokenized treasuries and corporate bonds could accelerate if rates stabilize.
d. Stablecoin rails will benefit regardless of BTC price
Cross-border settlement demand continues to rise even in bearish BTC environments.
10. Conclusion: A Temporary Freeze, Not a Permanent Winter
Citigroup’s warning is clear: without new ETF inflows, Bitcoin could temporarily fall toward $82,000, testing investor conviction. Yet the long-term outlook remains strongly bullish. Regulatory reform, macro stabilization, and the next phase of institutional adoption could propel Bitcoin to $181,000 over the next year.
For investors, the message is twofold:
- Short-term weakness is real, driven by liquidity outflows and defensive holder behavior.
- Long-term opportunity remains intact, especially for those positioning into compliant altcoins, Bitcoin accumulation strategies, and real-world blockchain use cases.
The halving winter may chill sentiment temporarily—but historically, these cycles have ended with powerful breakouts.
